eBay unconvinced by Ryan Cohen’s ‘memefied’ purchase offer

eBay Inc. (NASDAQ: EBAY) has received a takeover offer from GameStop Corp. (NYSE: GME), but this is not a friendly deal with both sides already at the table.

GameStop sent the proposal without any earlier talks with eBay, and the offer is not binding. But for those of us familiar with CEO Ryan Cohen’s personality, this is not surprising in the least. It is, perhaps, the most Ryan thing Ryan has done in some time.

eBay’s board is now checking the offer with legal and financial advisers. Shareholders have been told not to do anything yet.

The board will look at how much value the deal gives investors, how useful GameStop stock would be as payment, and whether GameStop can bring a serious offer that can actually close. That is the hard part, because eBay is worth about $48 billion, while GameStop is worth close to $11 billion.

eBay reviews GameStop’s cold offer as Ryan’s auction stunt blows up online

Ryan is, of course, trying to turn the bid into an internet event. On Wednesday night, Ryan said on X that his eBay account had been permanently suspended. He posted an image of what looked like an eBay notice saying the account was blocked because the activity was “putting the eBay community at risk.”

That post came only hours after Ryan said he was selling things on eBay “to pay for eBay.” He linked to an account page with 36 listings. The items looked like a meme-stock yard sale with better bidding. The page included retro video games, trading cards, life-sized character statues, GameStop collectibles, store signs, and what appeared to be used Adidas AG (OTC: ADDYY) socks.

By Thursday morning, the prices had already turned ridiculous. A pair of socks and some GameStop store signs had pulled bids of more than $14,000. A Halo 2 statue and another pair of signs were each above $10,000. Other listings included vintage baseball cards, including Willie Mays cards, and a sealed Windows 2000 package from Microsoft Corp. (NASDAQ: MSFT).

Each auction also included a signed copy of Ryan’s letter to eBay management, which was sent on Sunday. Buyers were also promised free shipping. That detail sounds small, but it shows how much Ryan tried to turn a corporate bid into a retail-trader spectacle.

Ryan told The Wall Street Journal that combining both companies “could be a legit competitor to Amazon.” The Amazon.com Inc. (NASDAQ: AMZN) comparison is the center of his pitch. He wants GameStop’s roughly 1,600 U.S. stores to work as product checking and delivery hubs for online sellers. He also wants some locations to become live selling studios, where sellers stream products to buyers like a mix of QVC, TikTok, and Twitch.

GameStop lines up debt while Wall Street questions how Ryan can pay

The money question has not gone away. Ryan’s eBay auctions may have grabbed attention, but they cannot fund a takeover. GameStop has a commitment letter from TD Bank Group (NYSE: TD) for up to $20 billion in debt financing. That still leaves a huge gap before GameStop can buy a company with a $48 billion market value.

Some investors are already out. Michael Burry, the investor played by Christian Bale in The Big Short, disclosed this week that he sold all his GameStop shares. Michael used to back GameStop, but he is not sitting in this trade now. On Substack, he wrote, “Never confuse debt for creativity.”

Ryan has a long history of loud bets. He started Chewy Inc. (NYSE: CHWY) in 2011, then sold the pet-supply e-commerce company to PetSmart for $3.5 billion. During the early 2020s meme-stock period, his venture firm made $68 million after selling a 10% stake in Bed Bath & Beyond.

Ryan bought into GameStop in 2020, then became one of the biggest names in the stock’s online run. Retail traders sent GameStop shares up more than 1,700% in a few weeks during the 2021 meme-stock frenzy. After serving on the board, Ryan became GameStop CEO in 2023.

Since taking over, Ryan has cut costs hard. GameStop has closed stores and laid off about 4,500 workers under his leadership. The company’s market value has climbed from $1.3 billion in 2021 to almost $11 billion now.

The smartest crypto minds already read our newsletter. Want in? Join them.